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Addleshaws should make more of the success of its Berezovsky fee arrangement
How could Addleshaw Goddard lose one of the biggest cases of the year yet still manage to bill Russian oligarch Boris Berezovsky £50m for the work it carried out for him over the past four years?
The firm has kept tight-lipped over the structure of the conditional fee arrangement (CFA) deal it struck with Berezovsky at the outset, hoping it could hold onto its competitive advantage by keeping schtum. Yet for a case of this size - and one that has generated so much interest - keeping a low profile has proved difficult.
It is understood that the firm drafted in leading costs silk Jeremy Morgan QC in August 2010 to advise on the deal.
The challenge was financially managing a case where financial disbursements covered everything from counsel to interpreters. According to a source close to the dispute, at one point this was costing the firm £2m a month.
What was needed was a guaranteed return to ensure the case had the backing of the firm. It has now emerged that no insurer agreed to take on the risk and third-party funders refused to make an investment above £5m, so the firm had to foot the bill.
Under the contract drawn up by Morgan the headline partners working on the case received an hourly rate discounted by 50 per cent to £250. This deal covered both the commercial and chancery cases, rising to £500 for the work on the live commercial case and again to £1,000 for the settlement of the chancery case.
The irony is that the firm has probably earned more by working on a CFA than it would have done on the traditional hourly rate.
And what is wrong with that? This is the kind of risk-sharing the client demanded. Berezovsky may have been branded an unreliable witness, but he was financially astute when it came to managing this case.
As for Addleshaws, it’s time to talk about the financial success of the case management.